For Zambia, a rise in US government bond yields is more than a Wall Street development. It can influence how expensive it becomes for the country to borrow abroad, how investors price Zambian assets and how much pressure the kwacha faces against the dollar.The yield on the US 30-year Treasury rose to around 5.44% on Thursday, its highest level since 2004, while the benchmark 10-year yield climbed above 5.1%.The move matters because US Treasury yields form a reference point for borrowing costs across much of the global financial system. When those yields rise, emerging markets such as Zambia can face higher financing costs even when their own domestic interest rates have not changed.The immediate trigger was a combination of stronger-than-expected US economic activity, expectations of further Federal Reserve tightening and rising oil prices.For Zambia, however, the bigger question is what a prolonged period of higher global interest rates means for a country still rebuilding its fiscal and external position after years of debt stress.<h3>Why Zambia should pay attention</h3>US Treasury securities sit at the centre of the global financial system. They are widely used as a benchmark for pricing other forms of debt.When Treasury yields rise, investors can demand higher returns from riskier assets as well.For an emerging market such as Zambia, that can increase the cost of accessing international capital.A Zambian government or company seeking to borrow in international markets does not compete with US Treasuries on equal terms. Investors generally demand an additional risk premium for lending to countries perceived to carry greater economic, currency or credit risk.If the underlying US interest rate rises, the overall cost of borrowing can therefore increase even if Zambia's own risk premium remains unchanged.<h3>The dollar channel</h3>Higher US yields can also make dollar-denominated assets more attractive to international investors.That can contribute to capital moving towards US markets and away from some emerging markets.For Zambia, movements in the dollar are particularly important because much of the country's external debt and international trade is denominated in foreign currencies.A stronger dollar can increase the local-currency cost of servicing dollar-denominated obligations and make imports more expensive.The effect is not automatic. Exchange rates also depend on copper export receipts, domestic monetary policy, foreign-exchange supply and demand, inflation and investor confidence.<h3>Copper provides a counterweight</h3>Zambia has an important advantage that many emerging markets do not: copper.Strong copper prices can increase export earnings and foreign-exchange inflows, providing support for the kwacha and improving the country's external position.But copper cannot completely shield Zambia from global financial conditions.If international interest rates remain elevated, investors may still become more selective about emerging-market assets. The country can therefore benefit from stronger commodity revenues while simultaneously facing a more expensive global financing environment.<h3>The debt lesson</h3>The latest Treasury move also underlines why Zambia's debt restructuring is only one part of the country's long-term financing challenge.Even after restructuring, future borrowing will be priced against prevailing international interest rates and the risk investors attach to Zambia.This makes fiscal discipline, export earnings, foreign-exchange reserves and the credibility of economic policy important determinants of future borrowing costs.For policymakers, the implication is straightforward: Zambia cannot influence the Federal Reserve, but it can influence how exposed the country is to changes in global financial conditions.The rise in US Treasury yields is therefore a reminder that Zambia's economic fortunes are shaped not only by what happens in Lusaka or Copperbelt mining towns, but also by decisions made in Washington and movements in global capital markets.When the price of money rises in America, emerging markets eventually feel it — and Zambia is no exception.

US Bond Yields Rise, Putting Zambia on Notice

A decision made by a central bank thousands of kilometres away can eventually show up in the price of imports, the value of a currency and the cost of borrowing in Zambia.Interest rates are usually presented as domestic policy decisions.The US Federal Reserve changes its policy rate to influence the American economy. The European Central Bank does the same for the euro area. But in an increasingly interconnected financial system, these decisions rarely remain within their own borders.For emerging markets, changes in global interest rates can have very real consequences.<h3>It starts with investors</h3>International investors are constantly comparing returns.When interest rates in advanced economies rise, government bonds and other assets in those markets can become more attractive relative to riskier emerging-market investments.Some investors may therefore reduce their exposure to emerging markets and move funds into assets perceived as safer or offering better risk-adjusted returns.The reverse can happen when global rates decline.Lower returns in advanced economies can push investors to search for yield in emerging and frontier markets.These movements can influence the availability and cost of foreign capital.<h3>The currency channel</h3>One of the most visible effects can appear in foreign-exchange markets.If international investors reduce their holdings of local assets, demand for the local currency can weaken. Depreciation can follow.For an economy that imports fuel, machinery, medicines, food or industrial inputs, this matters.A weaker currency means that the same dollar-priced import costs more in local currency.That can feed into domestic inflation.Central banks may then face a difficult balancing act. Cutting interest rates could support economic activity, but doing so while the currency and inflation are under pressure may create additional risks.<h3>Governments feel it too</h3>The impact does not stop with private investors.Emerging-market governments often rely on domestic and international borrowing to finance public expenditure and investment.When global interest rates rise, international borrowing can become more expensive. Investors may also demand higher yields to compensate for the increased opportunity cost and perceived risk of holding emerging-market debt.Foreign-currency debt creates another vulnerability.If the local currency depreciates against the dollar, the domestic-currency cost of servicing dollar-denominated debt increases even if the amount owed in dollars has not changed.This can place additional pressure on government budgets.<h3>Why Zambia is exposed</h3>Zambia provides a useful illustration of these transmission channels.The country is integrated into global markets through trade, investment and external financing. Copper exports generate foreign exchange, while the economy also depends on imported fuel, machinery and other goods.Global financial conditions therefore matter.A change in the attractiveness of US or European assets can influence international investor appetite for emerging and frontier markets. Changes in commodity prices can simultaneously affect Zambia's export earnings and foreign-exchange position.The result is that the impact of a global interest-rate shift is not necessarily straightforward.A period of higher global rates may create pressure through financing costs and capital flows, while strong copper prices could provide an offset through higher export receipts.Domestic policy and economic fundamentals matter as well.<h3>Not every emerging market experiences the same shock</h3>The phrase "emerging markets" can sometimes make very different economies sound identical.They are not.A country with substantial foreign-exchange reserves, strong export earnings and relatively manageable external debt may respond differently to a global rate increase than a country with large external financing needs and weak reserves.The structure of the economy matters too.Commodity exporters, for example, may benefit from rising prices for their major exports even as tighter global financial conditions create pressure elsewhere.This is why global interest rates should be understood as one part of a larger transmission mechanism rather than a single cause of economic outcomes.<h3>From Washington to Lusaka</h3>The important point is that monetary policy has become increasingly global in its consequences.A rate decision in Washington can influence international capital flows.Capital flows can affect exchange rates.Exchange-rate movements can influence import prices and inflation.Global borrowing costs can affect government financing.And these pressures can eventually feed into decisions made by businesses, households and policymakers in countries far from the original decision.The chain is not always immediate, and it does not operate in exactly the same way everywhere.But it helps explain why emerging-market economies pay close attention to decisions made by the world's major central banks.For countries such as Zambia, understanding this connection is increasingly important.The price of money is globalising, even when economic policy remains largely national.

How Shifts in Global Interest Rates Reach Emerging Markets. Placeholder summary for the World section. Replace this text with a real story or delete the article from the admin dashboard.

How Shifts in Global Interest Rates Reach Emerging Markets

When the price of fuel rises, the pain is immediate. It appears at the filling station, in transport fares, in the cost of moving goods and eventually in the prices consumers pay for food and other essentials. That is why the Zambian Government's decision to suspend excise duty and zero-rate Value Added Tax (VAT) on petrol and diesel imports made economic sense when it was introduced in April 2026. With global oil prices rising amid the crisis in the Middle East, the measure was intended to cushion households and businesses from another fuel-price shock.But there is another side to the policy that is less visible to the public. Someone still has to pay for the relief. In this case, that someone is the Treasury.The Government initially introduced the fuel tax relief for three months, from April to June 2026, before extending it for another three months from July 1 to September 30. When the waiver was first introduced, Government estimated that the initial three-month intervention would cost approximately US$200 million in foregone revenue. That figure provides a useful benchmark for understanding the scale of the policy.If the original US$200 million estimate is spread evenly across the three months, the implied fiscal cost is approximately US$66.7 million per month. At that rate, the six-month period from April through September could represent roughly US$400 million in foregone revenue. By September 7, the implied cumulative cost would be around US$349 million. At an exchange rate of approximately K19 per US dollar, that translates into roughly K6.6 billion in foregone tax revenue. By the end of September, the figure could approach K7.6 billion.These figures should not be mistaken for audited Treasury outturns. They are a simple extrapolation from Government's original US$200 million estimate, and the actual cost will depend on fuel import volumes, international prices, exchange rates, consumption and the resulting tax base. Nevertheless, even as an indicative calculation, the numbers are large enough to change the nature of the debate. This is no longer simply a question of whether motorists should pay more or less for a litre of petrol or diesel. It is a question of what Zambia is willing to sacrifice from its public finances to keep fuel prices lower.There is a legitimate economic case for the waiver. Fuel is not an ordinary consumer product. Petrol and diesel are inputs into almost every part of the economy. Trucks require diesel to move goods. Farmers depend on fuel to operate machinery and transport produce. Businesses incur fuel costs in their logistics operations, while public transport operators face fuel costs that influence fares. When fuel becomes expensive, the shock travels through the economy. Reducing fuel taxes can therefore provide benefits beyond the person filling a private vehicle. It can reduce transport and logistics costs, moderate inflationary pressures and give businesses some breathing room.For Government, the argument is straightforward: sacrificing tax revenue today may prevent a much larger economic shock tomorrow. That is a legitimate economic policy argument. But it does not answer another important question: who actually benefits from the relief?A fuel tax waiver is a broad instrument. A household that consumes 50 litres a month receives some benefit, while a household consuming 500 litres receives considerably more. A small trader who occasionally purchases fuel benefits, but a large logistics company operating a fleet of trucks benefits substantially more. The policy therefore does not necessarily distribute the fiscal sacrifice according to economic need.This matters because Government is effectively using public revenue to reduce the cost of a commodity consumed disproportionately by those who consume more of it. An alternative approach could have been to use part of the fiscal space for more targeted interventions, such as cash transfers, public transport support, agricultural production or assistance to particularly vulnerable households and productive sectors. That does not automatically mean targeted support would have been better than the fuel waiver. It means the alternatives should be compared against the cost of the current policy.The political attraction of a fuel waiver is easy to understand. The benefit is visible. Consumers see the price at the pump. The fiscal cost is much less visible. There is no display at a filling station showing how much tax revenue Government has surrendered that month. That cost appears somewhere else, in the public finances, where it competes with spending on health, education, infrastructure, social protection and debt obligations.This creates a fundamental challenge for fiscal policy. If Government collects billions of kwacha less in VAT and excise duties, something else eventually has to adjust. It could be expenditure, borrowing, the fiscal deficit or pressure to increase other sources of revenue. This is particularly important for Zambia because the country is simultaneously trying to strengthen domestic revenue mobilisation and maintain fiscal consolidation.The International Monetary Fund has already highlighted the suspension of fuel VAT and excise duties as one of the factors contributing to weaker tax collection and a deterioration in Zambia's projected fiscal position. This creates an uncomfortable policy tension. Zambia needs stronger domestic revenue mobilisation, yet at the same time it is deliberately giving up a significant source of domestic revenue.There may be good economic reasons for doing this temporarily. The problem begins when temporary emergency relief becomes difficult to withdraw.The real test, therefore, should not simply be whether the fuel waiver reduced prices. It did. The more important question is whether the economic benefits are worth the revenue Zambia is giving up.Government should be able to estimate how much consumers have saved as a result of the policy, how much businesses have saved, how much inflation was avoided and how much of the benefit reached lower-income households. That would allow policymakers to answer a much more important question than the headline cost: what did Zambia get for the billions of kwacha it sacrificed?If the country gave up K7 billion but prevented a major inflationary shock, protected businesses, reduced transport costs and preserved household purchasing power, the policy may prove to have been worthwhile. If much of the benefit accrued to higher fuel consumers while the fiscal position deteriorated, then the same resources might have generated greater economic and social returns elsewhere.Without that analysis, Zambia knows the cost of the intervention but has only a partial picture of its return.The September 30 expiry of the current waiver should therefore be more than another administrative deadline. It should be an opportunity for Government to publish a proper assessment of the intervention before deciding whether to extend it again. How much revenue was actually forgone? How much did motorists save? What happened to transport costs? What happened to inflation? How much did businesses save? And perhaps most importantly, who benefited?There is also a need for greater transparency around the counterfactual. Zambians should know what the pump price would have been if VAT and excise duties had remained in place. Only then can citizens properly understand the size of the relief they are receiving and the fiscal price being paid on their behalf.The temptation in public policy is to celebrate the visible benefit while ignoring the invisible cost. But tax policy does not make costs disappear. A tax waiver simply transfers the cost from the consumer at the pump to Government's balance sheet. And ultimately, Government's balance sheet belongs to the public.The fuel waiver may have been the right decision when global oil prices were threatening another inflationary shock. But a policy can be justified when it is introduced and still require reassessment several months later. Circumstances change, fiscal pressures change and the cost of continuing an emergency intervention becomes increasingly important.Based on Government's original estimate of US$200 million for the first three months, Zambia could be approaching US$350 million in foregone revenue by early September, with the six-month cost potentially reaching approximately US$400 million by the end of September. At around K19 to the dollar, that is a potential fiscal sacrifice of more than K7 billion.That is too much money for the country to evaluate the policy simply by asking whether fuel is cheaper.The harder question is the one that matters: was the relief worth what Zambia gave up to provide it?Before another extension is considered, Government should give the public the numbers.Because cheap fuel at the pump is not free.Someone is paying the bill.

Zambia’s Fuel Tax Holiday Is Not Free — Someone Is Paying the Bill

LIVINGSTONE — Dr. Edna Kabala Litana has made history as the first woman to lead the Economics Association of Zambia (EAZ)—but her election comes at a time when the economics profession itself is being tested.Zambia is navigating a complicated economic landscape: inflation and the cost of living remain important concerns, the exchange rate continues to matter for households and businesses, public debt has reshaped fiscal policy, and the country is under pressure to turn economic growth into jobs, investment and broader prosperity.It is against this backdrop that Dr. Litana takes over the leadership of the country’s professional association for economists.She was elected President during the EAZ elective Annual General Meeting held from September 3–4, 2026, at the Avani Victoria Falls Resort in Livingstone.Her election is historic. But beyond the symbolism of becoming the Association’s first female president, the more consequential question is what the new leadership will do with the platform. <h2>More than a change at the top</h2>The EAZ occupies an unusual space in Zambia's economic policy ecosystem.It is neither government nor a private-sector lobby. It is a professional association whose members include economists working across academia, government, business, finance, research and development.That gives the Association the potential to serve as an important bridge between economic theory, policy and the realities facing households and businesses.But that role also comes with a challenge.Zambia does not lack economic commentary.What it often lacks is sustained, independent and technically grounded economic debate that connects policy decisions to their consequences for ordinary people.That is where the new EAZ leadership has an opportunity to make its mark. <h2>The economics profession is changing</h2>The questions confronting economists today are also changing.Zambia's traditional economic debates around inflation, interest rates, fiscal deficits, exchange rates and debt remain important. But they now sit alongside new questions around artificial intelligence, digitalisation, climate change, energy security, mineral criticality, global trade disruptions and the changing structure of employment.For Zambia, the mining economy adds another layer.The country is seeking to expand copper production while positioning itself to benefit from growing demand for critical minerals. The challenge is not simply extracting more minerals, but determining how mining can generate stronger domestic value chains, investment, skills and long-term economic resilience.These are questions that require economists to look beyond headline GDP numbers. <h2>From commentary to influence</h2>The new EAZ administration inherits an Association with the opportunity to become more influential in national economic conversations.That could mean deeper engagement with government budgets and policy proposals, stronger economic research, more accessible public education and greater collaboration between economists in academia, business and public policy.It could also mean giving younger economists a stronger platform.Zambia has a growing community of economists working with increasingly sophisticated datasets, modelling tools and digital technologies. The EAZ could play a greater role in connecting this emerging generation to the country's most important economic policy questions.The test will be whether the Association can convert this professional expertise into something the wider public can actually use. <h2>A historic presidency, a demanding agenda</h2>Dr. Litana's election also comes after a period of interim leadership under Dr. Oswald Mungule's administration.The new executive therefore represents not simply a change in personnel, but an opportunity for institutional renewal.Dr. Litana, an economist, academic and entrepreneur with a PhD in Economics from the University of Zambia, now leads a newly elected National Executive Committee that includes figures such as economist John Ng’andu alongside other elected officials.The composition of the new leadership will matter, but its effectiveness will ultimately be measured by its output.Can the EAZ become a stronger source of independent economic analysis?Can it challenge economic assumptions without becoming politically partisan?Can it make economics understandable beyond conference rooms and policy circles?And perhaps most importantly, can it help reconnect economic policy with the lived experience of Zambian households and businesses?Those are bigger questions than who won an election.<h2>Why it matters</h2>The economics profession has considerable influence over how Zambia understands its economic choices.When inflation rises, economists explain why.When the kwacha moves, economists analyse the pressures.When government borrows, economists assess the implications.When GDP grows, economists ask whether that growth is translating into meaningful improvements in living standards.The EAZ has the opportunity to bring these conversations together under a stronger professional voice.Dr. Litana's historic election gives the Association a new face.The harder task will be giving it a sharper voice.For Zambia's economists, the next chapter is therefore not simply about representation. It is about relevance.The country will be watching what its economists have to say—and whether their analysis can help shape what Zambia does next.Katondo Street Journal will continue to follow the new EAZ leadership and Zambia's evolving economic policy debate.

Dr. Edna Litana Makes History as First Woman to Lead EAZ

President Hakainde Hichilema’s re-election gives Zambia something that has become increasingly valuable to the economy: policy continuity. After a first term dominated by debt restructuring, fiscal consolidation and efforts to restore investor confidence, the second term begins from a markedly different economic position. Zambia is no longer dealing primarily with the immediate consequences of a sovereign debt crisis. The bigger question now is whether the stability achieved over the past five years can be translated into stronger growth, better incomes and broader economic opportunity.The August 2026 election therefore has significance beyond the political outcome. For investors, businesses and households, it provides greater clarity about the direction of economic policy over the next five years. However, continuity should not be mistaken for a guarantee of prosperity. The economic challenges facing Zambia have changed, rather than disappeared.<h3>From economic repair to economic expansion</h3>The defining economic story of Hichilema’s first term was largely one of economic repair. Zambia entered his administration facing a severe debt crisis, limited fiscal space, high inflation and weakened investor confidence. Debt restructuring and the IMF-supported programme became central to restoring macroeconomic stability.There has been meaningful progress. Zambia has completed its IMF Extended Credit Facility programme, while substantial progress has been made in restructuring the country's external debt. Inflation has also fallen significantly from the exceptionally high levels experienced in previous years, while international reserves have strengthened. These developments matter because economic recovery is not simply about GDP growth. It is also about whether businesses and investors believe government finances, monetary policy, taxation and the regulatory environment are becoming more predictable.The second term, however, presents a different challenge. The question is no longer simply how Zambia can stabilise its economy, but how that stability can be used to generate sustained economic expansion. That is a much harder task because growth must now become more visible in employment, household incomes and business activity.<h3>The copper opportunity</h3>Copper will remain at the centre of Zambia’s economic story. Global demand for the metal is expected to remain strong because of its importance in electricity infrastructure, renewable energy, electric vehicles and other technologies associated with the energy transition. Zambia is therefore entering the second Hichilema term with a potentially significant opportunity.Higher copper production can generate export earnings, foreign exchange, tax revenues and employment. Increased investment in mining can also stimulate demand for transport, engineering, construction, financial services and other businesses. But there is an important question behind the headline numbers: how much value does Zambia actually capture from its mineral wealth?The long-term opportunity is not simply to produce more copper. It is to build a wider domestic economy around copper. That means stronger local supply chains, more Zambian participation in mining services, greater investment in skills and technology and, where commercially viable, greater processing and manufacturing activity. If mining investment increases without creating meaningful linkages with the rest of the economy, the benefits will remain narrower than they could be.<h3>The cost-of-living test</h3>Perhaps the most important economic challenge facing the government is also the most immediate one for ordinary households. Macroeconomic indicators can improve while households continue to feel financially stretched. Inflation has fallen, but lower inflation does not mean lower prices. It means prices are increasing more slowly. A household that experienced years of high inflation can therefore continue to feel pressure even after inflation returns to more manageable levels.This distinction will matter during the second term. The success of economic policy will increasingly be judged not only by inflation, international reserves or debt ratios, but by whether households experience improvements in purchasing power and employment. The ultimate test of economic stabilisation is whether people can feel it in their daily lives.<h3>Growth beyond copper</h3>Zambia's long-term economic prospects will depend on whether the country can diversify beyond mining. Agriculture remains central to employment and rural incomes, while manufacturing and services have considerable potential to absorb a growing workforce. However, diversification requires more than identifying promising sectors.Businesses need reliable electricity, efficient transport, access to finance, digital infrastructure and predictable regulation. Without these foundations, diversification will remain difficult regardless of how attractive Zambia's natural resources are. Energy may be particularly important. The country's dependence on hydropower has exposed the economy to drought and changing weather patterns, while electricity shortages can reduce mining output, disrupt manufacturing and increase costs for businesses.A more resilient energy system could therefore become one of the most important investments of the second term. Zambia's ability to add solar, thermal and other generation capacity alongside hydropower will have implications far beyond the electricity sector. Reliable power is ultimately a prerequisite for industrialisation.<h3>The debt lesson</h3>Zambia's debt restructuring is one of the defining economic developments of the Hichilema administration. But restructuring should not be interpreted as the end of the debt problem. The more important lesson is that Zambia has experienced the consequences of borrowing without sufficient regard to the country's capacity to repay.The government will face considerable pressure during the second term to increase spending on infrastructure, public services, wages and social programmes. Some of this spending will be necessary. The challenge will be ensuring that increased expenditure contributes to productive capacity rather than simply expanding recurrent obligations.The distinction between borrowing to build an asset that generates future economic value and borrowing to finance consumption will become increasingly important. For Zambia, fiscal discipline is therefore not simply an IMF requirement. It is a lesson from the country's own recent economic history.<h3>What does this mean for businesses?</h3>For the private sector, the re-election primarily provides greater certainty. Companies can make investment decisions with a clearer understanding of the policy environment over the next five years. This could benefit sectors such as mining, agriculture, energy, manufacturing, financial services and technology.But attracting foreign investment should not be the only objective. One of the most important measures of the second term will be whether new investment creates opportunities for Zambian businesses. A mining project that imports most of its equipment, services and expertise creates a different economic impact from one that develops competitive local suppliers. Similarly, infrastructure investment has greater long-term value when it creates productive ecosystems around it.The next stage of Zambia's economic development should therefore focus not just on capital coming into Zambia, but on economic value staying in Zambia.<h3>A new phase of the IMF relationship</h3>Zambia's relationship with the IMF is also likely to evolve. The previous programme was heavily focused on restoring macroeconomic stability and addressing debt sustainability. A successor programme, if agreed, will operate in a different environment. The challenge will be maintaining fiscal and monetary discipline while creating enough space for investment and private-sector growth.That balance will be critical. Too much austerity can constrain economic activity and public investment, while too much spending can recreate fiscal pressures. The second term will require a careful middle ground: maintaining credibility while creating the conditions for productive investment.<h3>The bigger question</h3>Hichilema's re-election does not represent either an automatic economic victory or a clean slate. It represents continuity at a particularly important moment for the Zambian economy. The first term was largely about restoring stability after a period of severe economic disruption. The second term now has the opportunity—and the burden—of turning that stability into transformation.That transformation should ultimately be measured in practical terms. Are more Zambians finding productive employment? Are local businesses growing? Is electricity becoming more reliable? Is agriculture becoming more productive? Is Zambia capturing more value from its mineral resources? Are household incomes rising faster than the cost of living? And, perhaps most importantly, is economic growth becoming less dependent on copper prices and government spending?These questions will matter more than the election itself. The re-election provides Zambia with five more years of policy continuity. What happens during those five years will determine whether the country simply consolidates the gains of economic stabilisation or takes the more difficult step towards sustained, broad-based prosperity.The first term was about repairing the Zambian economy. The second must be about making it work for more Zambians.

What Does HH’s Re-election Mean for the Zambian Economy?

Zambia enters the second half of 2026 at an important turning point. After several years dominated by debt distress, restructuring, drought and severe electricity shortages, the economy is showing clearer signs of stabilisation. Yet the central economic question has changed. It is no longer simply whether Zambia can restore macroeconomic stability, but whether that stability can be translated into sustained investment, productive employment and higher living standards.The recovery remains uneven. The International Monetary Fund (IMF) currently projects real GDP growth of about 4.3% in 2026, following an earlier forecast of 5.8%. The downward revision reflects weaker mining output, the normalisation of agricultural production after the exceptional 2025 harvest, softer trade activity and continuing energy constraints.The World Bank's May 2026 outlook is somewhat more optimistic over the medium term, projecting average growth of around 4.7% between 2026 and 2028, with agriculture, mining, industry and services providing the main sources of expansion.The difference between these forecasts is important. It illustrates that Zambia's recovery is real, but still highly sensitive to the performance of a few critical sectors—particularly mining, agriculture and energy. <h2>The debt crisis is giving way to fiscal normalisation</h2>Perhaps the most significant economic development of recent years has been Zambia's progress in restructuring its public debt.Following its sovereign default during the COVID-19 period, Zambia embarked on one of Africa's most complicated debt restructuring processes. Agreements covering a large proportion of external debt have now been reached, substantially reducing the immediate pressure on government finances.The World Bank estimates that public debt declined from 133.4% of GDP in 2023 to about 93.4% in 2025, following progress on restructuring roughly 94% of external debt.This is an important improvement, but it should not be interpreted as the end of Zambia's debt problem. Debt service remains a major constraint on public finances, while the government must simultaneously finance infrastructure, social services, energy investment and economic development.The next phase therefore requires fiscal discipline without sacrificing productive public investment. <h2>Copper remains the centre of gravity</h2>Zambia's economic story in 2026 remains inseparable from copper.Copper accounts for roughly 70% of Zambia's export earnings and more than 10% of GDP, making the sector both an enormous opportunity and a continuing source of vulnerability.Global demand for copper is being strengthened by electrification, renewable energy, electric vehicles, data centres and broader investment in electricity infrastructure. This gives Zambia an unusually favourable long-term position as one of Africa's major copper producers.Government has set an ambitious objective of increasing copper production towards 3 million tonnes annually by 2031. Achieving this would represent a substantial expansion of Zambia's productive capacity.But production targets alone will not transform the economy.The larger opportunity is to develop a domestic ecosystem around mining: engineering services, manufacturing, logistics, geological services, technology, financial services, processing and specialised human capital.The question for Zambia is therefore moving from how much copper can we produce? to how much economic value can we build around copper? <h2>Electricity remains the binding constraint</h2>If copper is Zambia's greatest external opportunity, electricity remains one of its most important domestic constraints.The 2023–24 drought exposed the vulnerability of Zambia's heavy dependence on hydropower. Low water levels resulted in severe load-shedding, affecting households, businesses, mines and agricultural production.Although electricity generation has been recovering, the episode demonstrated that energy security must become a central component of economic policy rather than simply an infrastructure issue.For Zambia to industrialise, it needs reliable and competitively priced electricity.This creates opportunities in solar generation, battery storage, transmission infrastructure, mini-grids and other forms of distributed energy. It also creates an opportunity to rethink the architecture of Zambia's electricity system, particularly for rural communities and productive enterprises located away from the national grid. <h2>Agriculture is recovering—but remains vulnerable</h2>Agriculture provides another major source of growth and employment.Following the severe drought, Zambia recorded a strong agricultural recovery, including a record maize harvest in 2025. However, the exceptional performance of 2025 also creates a statistical challenge for 2026: agricultural growth is likely to normalise as the base effect fades.More importantly, agriculture remains highly exposed to rainfall variability.The long-term challenge is therefore not simply increasing maize production. Zambia needs to raise agricultural productivity through irrigation, storage, agro-processing, digital agriculture, improved inputs, rural infrastructure and stronger links between farmers and markets.Agriculture could become considerably more important to Zambia's economic transformation if more of the value chain is retained domestically. <h2>Inflation and the cost of living remain important</h2>Macroeconomic stabilisation has also improved the inflation outlook, although price pressures remain significant for households.The IMF's current 2026 projection places consumer-price inflation at approximately 9%, with inflation expected to move gradually towards the Bank of Zambia's 6–8% target range.For households, however, the experience of inflation is not captured fully by the headline number.Food, electricity, transport and other essential expenses have a disproportionate impact on lower-income households. Consequently, an economy can record improving macroeconomic indicators while many citizens continue to experience economic hardship.This is one of the central challenges of Zambia's recovery: macroeconomic stability must eventually become household-level economic security. <h2>A new IMF programme is now part of the conversation</h2>Zambia completed its previous US$1.7 billion IMF programme in January 2026, a programme that played an important role in supporting the country's stabilisation and debt restructuring process.The government is now seeking a possible successor programme, with discussions expected to continue following the August 2026 elections. The stated objective is increasingly focused on attracting investment and supporting growth in mining, energy and agriculture rather than simply managing a crisis.This represents an important transition.The first IMF programme was largely about restoring credibility and stabilising public finances. The next phase should ideally be about creating the conditions for private investment, productivity and structural transformation. <h2>The election is an economic event as much as a political one</h2>Zambia's August 2026 general election comes at a particularly consequential moment for the economy.Investors will be watching policy continuity, fiscal management, the future of the IMF relationship, mining policy, energy reforms and the government's ability to convert Zambia's mineral wealth into broader economic growth.The election itself introduces uncertainty, but the larger issue is what happens afterwards.Zambia needs a policy environment capable of attracting long-term capital while maintaining fiscal credibility. It also needs to ensure that investment produces jobs, local supply chains and productive capacity rather than simply increasing the export of raw materials. <h2>The bigger challenge: growth is not enough</h2>Perhaps the most important distinction in assessing Zambia's economy in 2026 is the difference between economic recovery and economic transformation.Recovery means returning to growth after drought, debt distress and energy shortages.Transformation means changing the structure of the economy so that future growth is less vulnerable to copper prices, rainfall and external financing conditions.That requires greater productivity in agriculture, deeper manufacturing capacity, stronger domestic firms, better infrastructure, digitalisation, reliable energy and a much larger pool of skilled workers.It also requires Zambia to think differently about data and technology.The country's next economic opportunity may not simply come from exporting more commodities. It may come from building the digital, financial and physical infrastructure that allows businesses, schools, farms, mines and government institutions to operate more efficiently. <h2>2026: a year of transition</h2>Zambia's economy in 2026 is therefore best understood as an economy in transition.The country has moved considerably further away from the acute debt crisis of the early 2020s. Debt restructuring has progressed, economic activity has recovered from the drought, mining investment remains strong and the long-term copper opportunity is substantial.But the next stage will be harder.The country must convert macroeconomic stability into productive investment, employment and rising incomes. It must strengthen energy security, diversify agriculture and manufacturing, deepen local participation in mining and maintain fiscal discipline.The central economic question for the next decade is therefore not whether Zambia can grow.It is whether Zambia can turn growth into structural transformation.Copper may provide the capital. Agriculture may provide the employment. Energy may provide the foundation. Technology may provide the productivity gains.But ultimately, Zambia's economic transformation will depend on whether these elements can be connected into a coherent productive economy.2026 may therefore be remembered less as the year Zambia completed its recovery—and more as the year the country began confronting the much harder question of what it wants its post-debt economy to become.